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How construct a new contribution format income statement

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Reference no: EM132593801

Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows:

                                                  Amount                      Percent of Sales

Sales                                 $147,000                   100%

Variable expenses                     58,800                     40%

Contribution margin                     88,200                    60%

Fixed expenses                    20,000

Net operating income      $68,200

Required:

Question 1. What is the company's degree of operating leverage?

Question 2. Using the degree of operating leverage, estimate the impact on net operating income of a 22% increase in sales.

Question 3. Construct a new contribution format income statement for the company assuming a 22% increase in sales.

Reference no: EM132593801

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